By MICHAEL RAPOPORT
The government's audit overseer barred two former Ernst & Young LLP employees from auditing public companies Monday, alleging they provided misleading documents to inspectors who were evaluating the accounting firm's work.
The Public Company Accounting Oversight Board barred Peter C. O'Toole and Darrin G. Estella, a former partner and former senior manager in E&Y's Boston office, from associating with public accounting firms for at least three years and at least two years, respectively. Mr. O'Toole was also fined $50,000.
The PCAOB said Mr. O'Toole's three-year bar was the longest it had ever imposed on a partner of a Big Four accounting firm. The two men agreed to settlements with the PCAOB but didn't admit or deny the board's findings. Mr. O'Toole and Mr. Estella may apply to remove their bars after three and two years, respectively.
The PCAOB said that shortly before its inspectors were to scrutinize an E&Y audit of an unidentified company in 2010 as part of its regular inspections of the firm, Mr. O'Toole and Mr. Estella created, backdated and placed in the audit file a document concerning the valuation of one of the audit client's investments, the most important issue in the audit. Mr. O'Toole also allegedly authorized other members of the audit team to alter other working papers in advance of the inspection. The changes weren't disclosed to the PCAOB, the board said.
Ernst & Young said in a statement that it had "separated" both men from the firm after it determined that its policy prohibiting supplementing or changing audit documents had been violated. E&Y said it cooperated fully with the PCAOB's investigation, and that Mr. O'Toole's and Mr. Estella's conduct had no impact on the client's financial statements or on E&Y's audit conclusions.
Eugene Goldman, an attorney for Mr. O'Toole, noted that the PCAOB didn't allege any deficiencies in the audit, nor did it allege the men were trying to hide any audit failure or lie about the work that was actually done on the audit.
William Lovett, an attorney for Mr. Estella, said he didn't have any comment.
No comments:
Post a Comment